Thursday, January 19, 2017, 11:03 AM

On January 11, 2017, the FCC released its most extensive
“policy review” of mobile broadband operators sponsored data offerings for
zero-rated content and services since the Commission’s 2015 Open Internet
Order.

Rebuffing Republican requests, and a stated commitment by the
Chairman not to take action on any controversial post-election items before the
Trump Administration takes office, the FCC Wireless Telecommunications Bureau
(WTB), under Chairman Wheeler’s direction, released this Bureau report
following a year long investigation into the zero-rating practices in the mobile
broadband market. “Zero-rating” generally refers to the practice of not
counting consumer use of certain sponsored applications under a customer’s data
usage caps under mobile carrier sponsored data plan.

While
not finding zero rating plans per se harmful, the report singles out sponsored
data offerings by “vertically integrated mobile broadband providers” which “may
harm consumers and competition in downstream industry sectors by unreasonably
discriminating in favor of select downstream providers, especially their own
affiliates.” Report at 17. The Report expresses “serious concerns”
about AT&T Mobility’s Sponsored Data program, and that “we believe there is
a substantial possibility that some of AT&T’s practices may violate the [Open
Internet Order] General Conduct Rule.” Report at 12.

In
particular, the Report refers to AT&T “hefty per-gigabyte charges on
unaffiliated third parties [edge providers]”
that consumers might use for their Sponsored Data which compete against
AT&T’s DIRECTV Now affiliate. The WTB also references Verizon’s
FreeBee Data 360 sponsored data program as posing similar concerns as
AT&T’s but describes it as a “nascent” service with only a limited content
portfolio at this time in contrast to DIRECTV Now’s full range of live TV and
full length movies and shows. Report at 17.

Chairman Wheeler in a final
speech to the Aspen Institute on January 13 defended the Report’s conclusions
arguing that if the large ISPs can determine “which applications and clouds
work better than others in terms of access speed and latency, then they will
control the future.”

FCC Republican Commissioner Pai
issued a statement criticized the “midnight regulations” of the Bureau-level
report as done without a Commission-level majority, and which he saw only after
its release, as “casting doubt on the legality of free data offerings” that are
popular among consumers.

Commissioner Pai expressed confidence that the Report will
“not have any impact” on FCC policymaking or enforcement activities following President
Trump’s inauguration.